Academic journal article
By Bass, Bernard M.
International Journal of Business , Vol. 12, No. 1
Many challenges face the strategic leader who must deal with both the need for continuity and the need for change. Strategic leadership sets the directions, meaning, purposes, and goals of the organization. A long-term perspective is required along with many other competencies. Examples are provided of successful strategic executives and of why other CEOs fail.
JEL Classification: A13, D21, D23, D73, D74, D78, D81, J33, J53, L21, L22, L26, M12, M13, M14, M51, O32
Keywords: Behavioral model of leadership; Decision making; Successful and unsuccessful CEOs; Boards of directors; Top management; Governance; Strategy; Directive management; Participative management; Ttransformational leadership
Chief executive officers and top management set policies for acquiring and integrating resources for the organization. Among their goals are to reduce uncertainty, increase stability, increase resources, and reduce competition. They strive to create favorable public images and opinions of the organization and its products and services. They oversee conformance with government policies, regulations, taxes, and trade. Indirectly, they influence government through personal influence, support of lobbyists, trade associations, and political campaigns. Ideally, top-level business leaders choose markets based on strategic planning and location of their facilities. They manage the management, production and services systems. Their evaluations, coordination, and policies influence the organization's subsystems of finance, capital, and personnel (Day and Lord, 1988). In the nonprofit sector, James Webb, long-term Director of the National Aeronautic and Space Agency exemplified the effective chief administrator of a federal agency. According to Sayles (1979), NASA was superbly managed. In under ten years, the agency went from no knowledge of man in space to an operational space program. It was a tremendous accomplishment in organizational leadership. The strategic thinking and implementation had to occur in the face of many risks, uncertainties, and unknowns.
Strategies are a product of the interaction of the individual leader and the organization's internal and external environment. Systems thinking is required that aims to produce the synergies that are more than the sum of the individual parts of the organization. Complexity is the rule rather than the exception. The complexity is illustrated by two organizations jointly supporting basic research but competing in the same market.
Providing strategic leadership is an important role for the CEO and for many other senior executives (Farkus and De Backer, 1996). They need to understand the health of their available markets, the products and services that can serve those markets advantageously, balance sheets and the availability of capital, how to optimize the interests of the various organizational constituencies, how to manage change in good times and bad times, how to use authority and accountability, and how to shape an effective management team of diverse competencies and interests.
II. RELATIONS OF THE CEO AND SENIOR EXECUTIVES TO THE BOARD OF DIRECTORS
Rational economic theories like agency theory assume that the Board controls the CEO who will try to maximize his or her own utilities at the expense of the shareholders. Governance protects the shareholders. But a behavioral model assumes that CEOs are selected as stewards who have to balance interests of different types of stakeholders, including firm profitability, market value, product quality, and the development and stability of employment, community, and markets. The selection and evaluation of the CEO by the Board will depend on which models the Board endorses. Application of Board controls will diminish as the CEO learns the role, increases decision making competence, learns how to work with the Board and top management, and learns who are the most important stakeholders. …